The new model concession agreement – what you need to know
The government of India recently released a new model concession agreement (MCA) that outlines the terms and conditions for public-private partnership (PPP) projects in the country. The MCA is a comprehensive document that covers all aspects of PPP projects from inception to completion.
The MCA has been developed to address the shortcomings of the previous model concession agreements and to make the PPP process more transparent and efficient. The changes made in the MCA are aimed at improving the viability of PPP projects and reducing the risk for private sector investors.
One of the key features of the new MCA is the introduction of a fixed tariff regime. Under this regime, the private sector partner is allowed to charge a fixed tariff for the services provided, which is subject to periodic adjustments for inflation and other factors. This is expected to provide investors with greater certainty and stability in their returns.
Another notable feature of the MCA is the provision for termination payments. In the event that the government terminates the contract early, the private sector partner is entitled to receive a compensation payment. This is intended to provide investors with greater assurance that their investments will be protected in the event of unforeseen circumstances.
The MCA also includes provisions for dispute resolution, which are intended to reduce the time and cost of resolving disputes. This is expected to provide investors with greater confidence in the process and reduce the potential for delays and legal challenges.
Overall, the new model concession agreement is a positive development for PPP projects in India. The changes made in the MCA are aimed at improving the viability of PPP projects and reducing the risk for private sector investors. The fixed tariff regime, termination payments and provisions for dispute resolution are all designed to provide greater certainty and stability for investors, and to make the PPP process more transparent and efficient.